Shares of Northwest Airlines have soared more than 4% higher today, following positive comments from the brokerage bunch. Yesterday, the company reported that September traffic was up 1.1%, with load factor for the month rising to 83.7%. This morning, Merrill Lynch resumed its coverage on NWA with a buy rating, citing the airline's competitive cost structure after bankruptcy restructuring.
Technically, the shares have recently rebounded from potential short-term support at the 16 level and have overtaken near-term resistance at the 18 level on today's news. Checking in with our sentiment indicators, an extended rally could pressure short sellers into a short-squeeze situation. Currently, more than 6% of the stock's float is sold short and it would take nearly 7 days for investors to buy back these bearish bets.